INSTANT VIEW-Justin Trudeau's Liberals set to form Canada's next government

(Adds more comment)

TORONTO, Oct 22 (Reuters) - Canadian Prime Minister Justin Trudeau's Liberals held onto power after a closely fought election on Monday but were reduced to a minority government that will need the support of a smaller left-leaning party to govern. The vote showed a deeply divided country with the defeated Conservatives winning the popular vote, while a resurgent separatist Bloc Quebecois made big strides in the mainly French-speaking province of Quebec.


Market reaction: CAD/

COMMENTS:

LORI TURNBULL, ASSOCIATE PROFESSOR AT DALHOUSIE UNIVERSITY IN POLITICAL SCIENCE:

"Because the Bloc and the NDP did pretty well, there's no clear strong alternative. ... None really lifted itself up as a really attractive alternative and that let him (Trudeau) keep going."

"There's no Trudeau 2015 in this election."


COLIN CIESZYNSKI, CHIEF MARKET STRATEGIST AT SIA WEALTH MANAGEMENT

"The one area you would be watching for is the energy sector. But even then it has been pretty depressed for quite a long time. It is more of a case that had the Conservatives done better it could be seen as a positive surprise and you might have seen them (the energy sector) rally. I think you might see them sputter along here."


DOUG PORTER, CHIEF ECONOMIST AT BMO CAPITAL MARKETS

"The results were not radically different than the last polls, and a bit more of a conventional result than some earlier polls were pointing to."

"One question will be if the Liberals adopt any of the NDP proposals on raising taxes, or will the focus instead fall on pharmacare. It's likely that at least one key NDP priority will be addressed."

"Currency reaction will likely be moderate, since this result was broadly expected; if anything the Liberals have done somewhat better than expected, leaving them with a firmer grip on the reins."


CONRAD WINN, PROFESSOR OF POLITICAL SCIENCE AT CARLETON UNIVERSITY

"I think he (Trudeau) is going to face some serious difficulties. His main advantage is that his competing parties are poorly led and that's why they didn't succeed in defeating him. The Conservatives and the NDP, they really didn't choose their leadership very, very well."

"He's (Trudeau) going to have to curry support with somebody. The NDP may not wish to run another election, they may not be able to afford it. The Bloc may very well wish to run another election because they're on a bit of a comeback. It's not clear what kind of deal that Justin has to have with the opposition parties. He may have to have a deal with more than one party."

"He's in a grey area, where he went down, and that should be a source of major concern - especially since the decline in public support for him had so much to do with his poor judgment."

"On the other hand he didn't do as badly as many Liberals fears. So it's clear that his position is weakened. It's not clear that he's mortally damaged at all.


HUGH SEGAL, FORMER CONSERVATIVE SENATOR:

"The Tories made a fundamental mistake by being opposed to the carbon tax.

"When you have 500,000 Canadians in the street - 500,000 - (in climate protests), that impacts on people's homes.

"I've often heard it said the worst mistake a party can make is to get sucked into its own low expectations of the population."


ROB EDEL, CHIEF INVESTMENT OFFICER AT NICOLA WEALTH MANAGEMENT

"I think it was the most likely outcome and largely discounted by the market. The energy sector might be feeling a little insecure, but Trans Mountain should still get through."


JONATHAN ROSE, POLITICS PROFESSOR, QUEEN'S UNIVERSITY IN KINGSTON, ONTARIO

"Historically, the Liberals have been kind of a chameleon party. They've campaigned from left and governed from the right. They'll moderate the way they govern for the next few years.

"Markets like stability and minority governments are inherently less stable than majority governments, but Justin Trudeau and the Liberals are a known commodity and so it shouldn't be disruptive. Right now they don't need the Bloc Quebecois. That's probably a relief for the Liberals.

"The poor showing of the NDP and the huge showing of the Bloc Quebecois is a surprise. I also expected the Greens to do a little better. I think they (the Bloc) were expecting 20 seats and to have over 30 is amazing."


DAVID MOSCROP, POLITICAL SCIENTIST AT UNIVERSITY OF BRITISH COLUMBIA:

"We're seeing a much-needed chastening of the Liberal Party.

"I think when parties are forced to cooperate in Parliament they tend to produce great outcomes.

"Some of [the result] is a backlash against Liberal arrogance and entitlements. The Liberals set the bar so high they're bound to run into it."


KARL SCHAMOTTA, DIRECTOR GLOBAL MARKETS STRATEGY AT CAMBRIDGE GLOBAL PAYMENTS:

"The (results) suggest that Mr. Trudeau will require the support of leftist opposition parties to enact important pieces of legislation. The strongly environmentalist, anti-corporation and social spending-friendly New Democratic Party is likely to assume the king-maker role, meaning that investment-friendly pipeline and infrastructure initiatives could struggle to win approval.

"This is likely to exert drag on a Canadian dollar that might otherwise ride solid economic data, favourable interest rate differentials, and improving risk appetite higher."


DANIEL BÉLAND, DIRECTOR OF MCGILL INSTITUTE FOR THE STUDY OF CANADA:

"The Bloc Quebecois is surging in Quebec. The Liberals are not falling apart in Quebec altogether, they are slightly behind the Bloc in popular vote but they .... they're not collapsing altogether. I will not say this was unexpected, the polls were quite accurate this time around.

"It's a clear defeat for Andrew Scheer and the Conservatives."


JOHN MANLEY, SENIOR BUSINESS ADVISOR AT BENNETT JONES, CANADA'S FORMER FINANCE MINISTER AND INDUSTRY MINISTER:

"A minority government always makes things difficult ... the government doesn't control parliamentary committees, they have trouble keeping their agenda moving, they may have to do things or not do things that they would otherwise be inclined to do based on needing the support of another party.

"I think a Liberal government supported by the (New Democratic Party) is likely going to lean farther left.

"It raises a series of issues about what are the demands that an NDP party would make. What's the price of governing going to be? And I think businesses are going to be reluctant to make any moves until they get some satisfaction around that. I suspect most businesses would rather a small Liberal majority to a Liberal minority with the NDP supporting it."


GREG TAYLOR, PORTFOLIO MANAGER AT PURPOSE INVESTMENTS

"Markets don't like uncertainty so it will all depend on what coalition they can come up with and how sustainable that will become."

"The energy stocks will be the most interesting to watch tomorrow and could be lower. The other fear was higher capital gains taxes and that is too soon to tell but would be a negative across all sectors."

"The bigger problem is it seems that Canadians have never been more divided and the next government really needs to work to correct that. Alberta is at risk of a broader separatist movement and that would be a major negative for Canada."

"Overall this should be pretty much as expected and markets shouldn't move too much on it." (Reporting by Fergal Smith, Moira Warburton, Steve Scherer, Anna Mehler Paperny and Kelsey Johnson; Editing by Denny Thomas and Peter Cooney)